After nearly a decade of preparation and debate, the European Commission’s REACH legislation – a system for the registration, evaluation, authorization and restriction of chemicals – was adopted by the Parliament last December, and enters into force on June 1, 2007. Chemical producers, rather than government authorities, will be legally obligated to conduct and communicate assessments regarding the health, safety and environmental (HSE) aspects of their products.
REACH is the most ambitious chemicals legislation in the world and a marked improvement over the current situation, says Environmental Commissioner Stavros Dimas. The regulation will require the registration, over a period of 11 years, of around 30,000 chemical substances in use today (See Box on p. 26). The most dangerous of these will be progressively phased out and replaced by safer substances. Ultimately, REACH is expected to protect EU citizens and the environment, while encouraging innovation in the chemical industry, says Dimas.
Skeptical
Although REACH is said to simplify the current situation by replacing some 40 directives and regulations by a single system, many believe that the authorities are trying to do too much too quickly. "Although the ACC does share in the objectives of REACH – to stimulate innovation and to ensure that chemicals are used in the safest way possible – we fear that the roadmap may not be achievable," says Steven Russell, senior director of regulatory and technical affairs at the American Chemical Council (ACC; Arlington, Va.).
Russell points out that ACC members must subscribe to Responsible Care, an aspect of which is Product Stewardship. So the concept of safe use of products is not new; and understanding the chemical’s impact on HSE is not new. What is new under REACH is the degree of risk assessment and communication to potential competitors. Safety is not proprietary, toxicity is not proprietary, but what’s not in the public domain, and will be under REACH is the identity of your customers; and the customer doesn’t want others to know whom they’re getting their chemicals from. For this and many other reasons, REACH is making some companies rethink their business strategies, he says.
The impact of REACH
REACH will have a huge impact on the trade flows from and to the EU and is bound to influence investment and sourcing decisions, says Annemaria Ojanperä, senior counsellor, communications, program product stewardship at the European Chemical Industry Council (Cefic; Brussells, Belgium). In theory, EU producers of chemical substances and their foreign competitors will face the same burden with respect to sales on the EU-market, even though for foreign manufacturers it is only the quantity produced for export to the EU that counts.
Nevertheless, foreign manufacturers will need to evaluate on a case-by-case basis whether the profits generated by their EU exports offsets the cost of testing and administration, she says. The resulting disappearance of substances may create problems for downstream users of these chemicals. On the world markets, EU producers will have a competitive disadvantage as they cannot pass on the higher costs to their customers. But the complexity of REACH in itself will burden more foreign producers, in particular small- and medium-sized enterprises (SMEs) and producers from developing countries. With respect to preparations and polymers, again foreign producers will be more seriously affected by REACH, which may lead to a shift in trade patterns, says Ojanperä.
REACH is a very significant piece of legislation that will affect our members directly, says ACC’s Russell. It will also affect our member’s customers, such as formulators, he says. "The impact is broad and deep."
Although it’s too early to quantify what impact REACH will have, we can predict that REACH will result in significant pressure to eliminate from commerce the use of certain hazardous chemicals, says Russell. "Although this may result in reduced risk in some cases, in spite of good intentions the ‘law of unintended consequences’ means that there will also be some adverse effects, where reducing one potential risk results in creating a new, real risk instead."
Another consequence of REACH will be a reduction in the number of chemicals available on the market, meaning reduced choices for customers, predicts Russell. For example, suppose a company is producing five different products with adhesive properties. To market these products in the EU, each of the five has to be registered at about €24,000 each. If the company has limited resources, it may decide to only market the top two or three sellers. As a result, the formulator will have fewer choices and this economic pressure will lead to a smaller range of products available.
Costs
REACH will impose across-the-board costs for registration, testing, and for writing up risk assessments, which can run into the hundreds of pages. For less prepared companies there will be lots of consultant contracts and increased costs, says Russell. Companies that have already invested in HSE, toxicity studies, product stewardship and so on, will find compliance less of a burden. If the chemical is used in a market where it is not easy to pass on the cost to the consumer, then it will be a problem, he says.
The big players already have many toxicologists and routinely perform risk assessments, says Pertti Hakkinen, a principal consultant at Gradient Corp. (Cambridge, Mass.). But REACH is much broader, requiring one to look across the board. Not just the chemical’s toxicity is needed, but for the first time, its HSE impact up and down the entire supply chain must be evaluated, including exposures associated with the intended uses; this is what makes it a challenge, he says. "Smaller and less-prepared companies will need outside help."
The debate on the business impact of REACH has withered away over the past two years, but this does not mean that the costs of REACH are now negligible, exclaims Cefic’s Ojanperä. It is clear that the direct costs of testing and administration resulting from REACH to the industry will be huge and will exceed the estimations made by the Commission. Cefic estimates these costs to be in the order of €4 to 5 billion (over 11 years). More important, however, will be the costs for the downstream industry, which will need to reformulate its preparations – a very time-consuming affair, assuming that suitable alternatives exist, says Ojanperä. This is so because REACH will result in a reduction of product portfolios of companies, not for HSE reasons but mainly for economic reasons; that is, because the profits generated by these products do not warrant the high expenditure associated with the registration process. So both in terms of money and time REACH imposes a hefty burden on the industry.
Getting ready
Cefic will, via REACHCentrum, help to reduce these costs by facilitating the formation of consortia so that these costs can be shared as much as possible among European and non-European producers. Established by Cefic last summer, REACHCentrum is a professional services body to help companies all through the value chain; initially with preparation, and then with implementation of REACH.
A legally separate entity from Cefic, REACHCentrum will be part of an integrated and consistent network of services provided by Cefic, national associations and Member State authorities. Cefic has over five years of experience in developing workable REACH legislation, as well as a major role in the development of REACH Implementation Projects (RIPs) of the Commission, most of which aim to develop guidance, methodology and tools for industry and authorities. Cefic is now turning this expertise into practical help for companies. The services of REACHCentrum include an information desk, practical services such as tools, guidance and training, consortia management, and help in implementing the different steps of REACH.
At BASF AG (Ludwigshafen, Germany), detailed preparations for the new chemicals legislation are underway, says Matthias Meder, head of BASF’s REACH implementation team. This team, consisting of experts from operating divisions, local companies and corporate departments, was established two years ago. Based on production and import volumes of the firm’s substances inventory, registration requirements are determined. Also, data regarding its products are being checked and brought up to the new standard.
Customers and suppliers of BASF are also affected by REACH. Many SMEs do not have sufficient expertise or sufficient resources, says Meder. BASF supports its customers on how they can best prepare for the new regulation.
A REACH Tracking System has been set up to assist BASF REACH coordinators and product-safety managers in Europe. This database holds information on several thousand of substances, including details on applications and exposure scenarios. Around 2,500 of these substances will be registered under REACH.
Cefic is very active in various activities targeted at preparing industry for REACH, says Ojanperä. Several working groups have been established to raise awareness and readiness among the chemical industry so that companies will be prepared to comply with the REACH requirements, she says. Cefic organizes workshops and issues a regular newsletter for its members, which gives practical guidance.
As our counterparts in Europe and Japan, the ACC has organized a series of workshops for members, says Russell. ACC also maintains regular contact with its members and offers compliance-assistance techniques, he says. As a result, members are quickly becoming aware of their obligations. So although REACH will enter into force in June, the framework for REACH has been understood for many years, so nobody should be caught completely off guard, says Russell.
But will it work?
In many respects, the chemical industry is more prepared for REACH than the EU authorities. Day-to-day management of the new requirement will be carried out by the European Chemicals Agency (ECHA; Helsinki, Finland), and the first wave of new staff will move there this summer. The first REACH obligation (pre-registration) will then take place from June 1 through November 30, 2008, followed by registration in timeframes of 3.5, 6 or 11 years, depending on the amount of the chemical produced or imported, or the level of concern of the substance (Figure 1). The IT tools, which will enable companies to register electronically, are expected to begin to be ready a few months from now.
This is one of the challenges of REACH, says Hakkinen, that it is a work in progress. Although the legislation has been adopted and will be enforced, the IT tools and guidance documents are still being developed. Furthermore, the existing rules will begin to be reviewed after 12 months with a series of reviews of selected parts of REACH scheduled over the next decade. "You can be an expert on REACH now, but will have to keep up with the ongoing changes."
The obligations for this 850-page legislation (and, so far, an additional 4,000 pages of guidance documents) will take time to digest, says ACC’s Russell. But once REACH enters into force in June, the ECHA has until June 2008 to open its doors, and then produces will have 6 months to preregister. Thirty days later, the commission will send a link for individualized virtual forums where companies registering the same chemical can discuss what data is available. Although REACH will be phased in over 11 years, the hard reality is that a company has only 30 days to share data it has on one chemical; a second company registering the same chemical then has two weeks to send a receipt and pay for the data. All this for 30,000 substances?, questions Russell. "In some respects, the final legislative package seems to be more ‘aspirational’ than actually workable."
"The European chemical industry will see REACH as an opportunity to demonstrate that companies have a solid knowledge of chemicals and strong product-management practices to ensure chemical safety, says Cefic director general Alain Perroy. "Nevertheless, the industry wants to make REACH work."